Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Rises despite Increased Uncertainty Over PM
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged up slightly this morning. This left the pairing trading at around NZ$2.0609
Sterling sentiment remained fragile this morning after the news Prime Minister Boris Johnson was moved to intensive care.
GBP/NZD was unable to make significant gains this morning as an increase in risk appetite bouyed the ‘Kiwi’.
Due to his persistent coronavirus symptoms and on the advice of his medical team, the PM was moved into intensive care. Downing Street also said Johnson was receiving ‘excellent care’ and added that he was still conscious.
This increased uncertainty as the UK has no formal succession plan if the Prime Minister becomes incapacitated.
Although, Boris Johnson asked Foreign Secretary, Dominic Raab to deputise for him.
Commenting on this, Edward Moya, senior market analyst at OANDA noted:
‘It is unclear what the emergency succession plan would be for the prime minister. Markets hate uncertainty and this does not bode well for further steps in battling COVID-19 and for future Brexit trade negotiations.’
New Zealand Dollar (NZD) Falls despite Slowing Global Coronavirus Cases
The New Zealand Dollar was offered some support on Tuesday as the number of global coronavirus cases began to slow.
However, NZD was unable to make gains against the Pound, which also benefitted from the weaker US Dollar (USD).
The boost in risk appetite supported the ‘Kiwi’ on signs some of the worst-hit countries such as Spain, Italy and New York are reporting a lower number of new cases.
Commenting on this, Kiwi Bank dealer, Mike Shirley noted:
‘With interest rate differentials at virtually nothing now, the New Zealand Dollar’s now a proxy for risk.
‘The other aspect playing out for the New Zealand dollar is all this upcoming debt issuance.’
Meanwhile, many investors are now looking for signs of a pandemic peak, although volatility is likely due to the unpredictable nature of the virus.
Commenting on this, Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo said:
‘Signs of a slowdown in the spread of coronavirus provided markets a boost, but the reality is we cannot be certain, so it’s natural for the [US] Dollar to come lower.
‘It’s difficult to trade solely on the factors from one country, because so many countries are in a bad state because of coronavirus.’
Pound New Zealand Dollar Outlook: Coronavirus and PM Boris Johnson in Focus
Looking ahead, the New Zealand Dollar (NZD) could edge higher against the Pound (GBP) if risk appetite continues to rise.
If the number of Covid-19 cases continues to slow across the world, the rise in risk sentiment will boost the ‘Kiwi’.
Meanwhile, Sterling sentiment could continue to remain fragile if Prime Minister Boris Johnson remains in intensive care. This could cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to edge lower.